When a person enters an agreement with a neighbor to buy 215 sheep on August 31st, the contract is referred to as a Long forward position.
The long forward position means that the person has agreed to purchase an underlying asset (in this case, sheep) at a specified price (agreed upon with the neighbor) at a future date (August 31st). It is a contractual agreement between the two parties to buy and sell the asset at a predetermined price and date.
The buyer of the forward contract is said to hold a long position in the forward contract, while the seller of the forward contract is said to hold a short position in the forward contract.
In this case, the person who enters the agreement to purchase the sheep has a long forward position, which means that they are obligated to purchase the 215 sheep at the agreed-upon price on August 31st.If the person changes their mind and decides not to purchase the sheep, they would be in breach of the contract.
On the other hand, if the neighbor fails to deliver the sheep on August 31st, they would be in breach of the contract and may be liable for damages as a result. In summary, when a person enters an agreement with a neighbor to buy 215 sheep on August 31st, the type of contract is a Long forward position, and their position is that of the buyer or holder of the long position in the forward contract.
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compare the amount of risk among the following choices for a multinational facing foreign exchange risk.
Forward transaction = Money market hedge < Option hedge
Option hedge < Money market hedge = Forward transaction
Forward transaction < Money market hedge = Option hedge
Forward transaction < Money market hedge = Option hedge
Therefore, the amount of risk among the given choices for a multinational facing foreign exchange risk can be compared by considering the level of risk of each of the alternatives, which is Option hedge < Money market hedge < Forward transaction.
In terms of risk, the three alternatives have different levels of risk: the lowest risk is associated with Option hedge, the medium level of risk is associated with Money market hedge, and the highest level of risk is associated with Forward transaction.
Therefore, the order of the amount of risk among the given alternatives is
Option hedge < Money market hedge < Forward transaction.
In simple terms, Forward transaction is the riskiest alternative for multinational companies facing foreign exchange risk while the least risky alternative is Option hedge.
Therefore, the amount of risk among the given choices for a multinational facing foreign exchange risk can be compared by considering the level of risk of each of the alternatives, which is Option hedge < Money market hedge < Forward transaction.
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With regard to boards of directors, and in particular their oversight of the CEO, the board of directors' _______ is the biggest complaint.
The board of directors' lack of independence is the biggest complaint regarding their oversight of the CEO.
The independence of the board of directors is a crucial aspect of their role in overseeing the CEO and ensuring effective governance. Independence refers to the board members' ability to make impartial and objective decisions without being influenced by personal or financial interests that may compromise their judgment. When the board lacks independence, there can be concerns about potential conflicts of interest or undue influence from the CEO or other stakeholders, leading to a perceived lack of effective oversight. This lack of independence is often cited as the biggest complaint regarding the board of directors' role in overseeing the CEO.
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Distinguish between the Active style and Passive style Investing and provide your insight on which approach is appropriate considering different Investor profiles with different risk appetites. Use relevant examples to demonstrate your understanding of different strategies under active and passive investing.
Active style investing is a strategy in which investors aim to outperform the market by investing in individual stocks, sectors, or asset classes. Passive style investing is a strategy in which investors aim to match the returns of the market as a whole by investing in a diversified portfolio of stocks.
Active style and Passive style Investing are the two major approaches to investing in the stock market.
Active investing strategies include:
1. Value Investing: This strategy involves buying undervalued stocks that are expected to appreciate in value over time. Value investors believe that the market sometimes undervalues stocks, providing opportunities to buy high-quality companies at a discount.
2. Growth Investing: Growth investors look for stocks that have the potential to grow at a faster rate than the overall market. They may invest in companies that have high earnings growth, expanding profit margins, or other positive attributes that suggest future growth.
3. Momentum Investing: Momentum investors buy stocks that have recently experienced positive momentum in the market. They believe that stocks that have been trending upward recently will continue to do so for some time.
Passive investing strategies include:
1. Index Investing: This strategy involves investing in an index fund or ETF that tracks a particular market index, such as the S&P 500. Index funds offer low fees and are highly diversified, which makes them an excellent choice for long-term investors.
2. Buy-and-Hold Investing: This strategy involves buying stocks and holding onto them for a long time, typically at least five years. This approach allows investors to benefit from the long-term growth of the stock market.
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Carry trades are usually profitable because they represent a risk premium due to the possibility of a major loss during bad times. "" Fully explain the extent to which you agree with this statement. IN DETAILS PLEAES
Carry trades can be profitable due to the risk premium associated with potential losses during adverse market conditions, but their profitability is also influenced by other factors.
Explanation: Carry trades involve borrowing a low-interest-rate currency to invest in a high-interest-rate currency, taking advantage of the interest rate differential. The profitability of carry trades is driven by the interest rate differential and the exchange rate movements between the currencies involved.
During stable economic conditions, carry trades tend to generate profits as investors earn higher interest income from the high-interest-rate currency. However, the risk premium arises during times of economic uncertainty or market turbulence. In such situations, investors may experience significant losses due to sudden currency fluctuations or interest rate changes.
The risk premium associated with carry trades compensates investors for the potential losses during these bad times. The higher the perceived risk, the larger the potential return on the carry trade. This risk premium is essential for attracting investors to undertake to carry trades and helps to explain their profitability.
Therefore, while the risk premium plays a significant role, it is not the sole determinant of profitability in carry trades.
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Eara has a holiday cottage in his garden which is used by friends and family. During the 2020/21 tax year it was rented out for a total of 212 days for a total of £42,500. In April 2021 he recelved a late payment for a February 2021 letting for E1,250. Frederick has calculated that he can claim E5,550 in capital allowances. If he is a basic rate taxpayer, how much income tax will he pay on his furnished holiday lettings income assuming that he uses the accruals
During the 2020/21 tax year, Eara 's holiday cottage was rented out for 212 days for E42,500. In April 2021, he received a late payment of E1,250 for a February 2021 letting.
Frederick has calculated that he can claim E5,550 in capital allowances. Assuming that he uses accruals, if he is a basic rate taxpayer, he will pay E_ in income tax on his furnished holiday lettings income. Let's begin by calculating the gross income from holiday lettings in the 2020/21 tax year:
212 days at E200 per day = E42,500.Adding E1,250
for the February letting = E43,750.
Let's figure out the expenses: Eara's expenses can be separated into two categories: those that are allowable for tax purposes and those that are not allowable for tax purposes. Eara 's expenses for the holiday lettings include:Cleaning and maintenance expenses, as well as expenses associated with the upkeep of furniture, fixtures, and fittings, are all deductible.
Advertising and administration expenses, as well as E5,550 in capital allowances, are also included. Eara may not include mortgage interest on his cottage in his taxable expenses because the cottage is deemed to be part of his principal private residence (PPR).
Gross holiday lettings income: E43,750Allowable expenses:
(E4,750)Capital allowances: (E5,550)Total profits = E33,450
Less personal allowance: (E12,570)Taxable profits = E20,880
The basic rate of tax is 20%, therefore:E20,880 x 20% = E4,176
Eara will pay E4,176 in income tax on his furnished holiday lettings income assuming that he uses accruals. Hence, the answer is E4,176.
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1. Describe the key characteristics of effective sales dialogue 2. Explain how salespeople can generate feedback from buyers. 3. Discuss how salespeople use confirmed benefits to create customer value. 4. Describe how verbal support can be used to communicate value in an interesting and understandable manner.
1. Characteristics of effective sales dialogueEffective sales dialogue is an important skill that salespeople should possess to enhance their performance.
The key characteristics of effective sales dialogue include:
1. Listening: Active listening is critical to effective sales dialogue. Listening attentively enables the salespeople to identify the customer's pain points and tailor the product/service benefits to meet the customer's needs.
2. Empathy: Salespeople should put themselves in the customer's shoes to comprehend their perspective and connect with them on a personal level. This fosters trust and increases the likelihood of making a sale.
3. Preparation: Salespeople should prepare adequately by researching the customer's preferences, industry trends, and competition to develop an informed perspective that will enable them to engage the customer meaningfully.
4. Clear communication: Salespeople should articulate the product/service features and benefits in a clear and concise manner that the customer can understand. Using plain language and avoiding jargon enhances the customer's comprehension and creates a favorable impression.2. How salespeople can generate feedback from buyersSalespeople can generate feedback from buyers through the following means:
1. Probing questions: Salespeople can use probing questions to gather information about the customer's preferences, needs, and wants. This information is crucial in tailoring the product/service benefits to meet the customer's needs.
2. Open-ended questions: Salespeople should use open-ended questions to encourage the customer to express their thoughts and feelings about the product/service.
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The bank is paying 8.57% compounded annually. The inflation is expected to be 4.59% per year. What is the market interest rate? Enter your answer as percentage, without the \% sign. Provide 2 decimal places. For example, if 12.34%, enter: 12.34
To find the market interest rate, first, we need to understand what is meant by it. The market interest rate is the rate at which banks and other financial institutions are willing to lend money to borrowers.
It is influenced by several factors like inflation, economic conditions, and the demand and supply of money. In this problem, we know the inflation rate and the interest rate paid by the bank, and we need to find the market interest rate. We can use the Fisher equation to do that.
The Fisher equation is:
Market interest rate = nominal interest rate - inflation rate
(1)Where nominal interest rate is the interest rate paid by the bank.
Substituting the values we get:
Market interest rate = 8.57% - 4.59% = 3.98%
Therefore, the market interest rate is 3.98% (rounded off to two decimal places).
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true or false: technical accounting skills represent the only skills required of accounting professionals
False. Technical accounting skills are important for accounting professionals, but they are not the only skills required.
Accounting professionals need to possess a combination of technical, analytical, and soft skills to excel in their roles.
Technical accounting skills refer to the knowledge of accounting principles, standards, and practices. These skills involve understanding financial statements, bookkeeping, tax regulations, auditing, and other technical aspects of accounting. They are essential for performing tasks such as preparing financial reports, conducting audits, and ensuring compliance with accounting standards.
However, accounting professionals also require analytical skills to interpret financial data, identify trends, analyze business performance, and make informed decisions. They need to be able to analyze complex financial information, identify patterns, and provide valuable insights to support strategic decision-making.
So, while technical accounting skills form the foundation of an accountant's expertise, a well-rounded accounting professional should also possess analytical skills, soft skills, and the ability to adapt to changing requirements.
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Problem 3: A firm's stock has a beta of 1.25; the expected return on the market is 12%; and the risk-free rate is 4%. What is the expected rate of return on this stock? (From Chapter 11)
The expected rate of return is a crucial component of investing and finance, as it allows investors to compare the potential of various investments.
This is because the rate of return indicates how much money an investor can anticipate earning in exchange for putting money into the investment. An investment's rate of return is the return earned on an investment's capital divided by the cost of that capital. Investors typically consider the expected rate of return when making investment decisions, as it is an important consideration when deciding whether to invest in an asset or not.
In finance, the expected rate of return is the return on investment that an investor anticipates receiving from an investment in the future. In the given scenario, the expected rate of return on the stock can be calculated by the Capital Asset Pricing Model (CAPM) formula:
[tex]Expected return = Risk-free rate + Beta (Market risk premium)Given information[/tex],
[tex]Beta = 1.25; Expected market return = 12%,[/tex]
and the [tex]Risk-free rate is 4%[/tex].
Substituting the values in the formula, we get;
[tex]Expected return = 4 + 1.25 (12 - 4) = 4 + 1.25 (8) = 14%[/tex]
Therefore, the expected rate of return on the stock is [tex]14%[/tex].
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Describe a current governmental or political issue or problem of importance.
• Address the various sides of the current issue and draw personal conclusions based on analysis of the issue.
• demonstrate an understanding of its complexities.
• Present an informed evaluation of the evidence and the different viewpoints surrounding the topic.
• Compare and contrast the different viewpoints of the sources cited, taking into account position limits. Analyze and question your sources’ assumptions.
The world is experiencing a political issue that has so far spread across the globe, which is the issue of Climate Change. This issue is getting worse by the day as temperatures increase worldwide. The change in weather patterns and the rise in sea levels are some of the adverse effects of this problem. The adverse effects of this issue cut across every sector of the economy.
Various sides of the issue have been expressed, with some people believing that climate change is a myth while others see it as a reality. Some people argue that climate change is not caused by human activities but rather by natural causes, while others believe that human activities cause climate change. There is also a group that believes that the government should play a more active role in finding solutions to this problem while others think that the government should not interfere with the market forces that have led to the current situation.
To sum up, climate change is a global issue that must be addressed urgently. There are various sides to the issue, and it is a complex problem that requires a multidisciplinary approach. Governments must play an active role in finding solutions to this problem while taking into consideration the interests of various stakeholders. It is only through a collaborative approach that we can find sustainable solutions to this problem.
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ge WCAP lab practical: Ann... Question Completion Status: QUESTION 19 Table: Long-Run Total Cost Quantity of Soybeans (bushels) Long-Run Total Cost S 50 $ 80 $ 90 2 $120 $200 $300 5 6 (Table: Long-Run Total Cost) Examine the table Long-Run Total Cost. Over what range of output does this soybean grower experience increasing returns to scale? OA fourth and fifth bushels O B. fifth and sixth bushels third and fourth bushels D.first and third bushels OUECTINA 20 Click Save and Submit to save and submit. Click Save All Answers to save all answers Save All Answers 17 k Pro Q Search or type URL
Range of output does this soybean grower experience increasing returns to scale is fourth and fifth bushels. Thus, option (a) is correct.
The long-term total cost's rate of growth is not constant. We must search for the range of output where the long-run total cost increases at a decreasing rate in order to identify the range of output where the soybean grower experiences increasing returns to scale.
This is due to the fact that the long-term total cost rises from producing two to producing five bushels by $120, but merely from producing five to producing six bushels by $80.
Therefore, option (a) is correct.
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Course name : financial statement analysis
Answer The follwing questions
a ) Determine how the different depreciation methods (straight line VS accelerated methods) affect the financial statements and financial ratios of a firm.
b) Determine the difference between simple capital structure and complex capital structure. Identify the potentially dilutive securities.
c) Identify the different types of lease agreements and determine the effect of each on the firm’s income statement, balance sheet, and cash flow statement.
a) Financial statements and financial ratios of a firm are impacted by different depreciation methods are Straight-line depreciation methods and Accelerated depreciation methods.
b) A simple capital structure is a company's capital structure that only has common stock, nonconvertible debt, and preferred stock as the securities outstanding.
c) There are two types of lease agreements: operating lease agreements and capital lease agreements.
a) Straight-line depreciation methods result in the same amount of depreciation expenses each year, resulting in a consistent net income from year to year. In contrast, an accelerated method will cause more depreciation expenses early in the asset's life, causing a more significant reduction in net income in the earlier years.
Accelerated depreciation methods, therefore, cause net income to fall at a quicker rate than straight-line methods, resulting in more financial leverage on the firm's balance sheet. The cash flow, income statement, and balance sheet will all be affected by the depreciation method chosen, particularly when determining asset value and the cash flows generated by investments.
b) A simple capital structure is a company's capital structure that only has common stock, nonconvertible debt, and preferred stock as the securities outstanding. The conversion of these securities into common stock does not cause a potentially dilutive effect.
Complex capital structures are those that have securities other than common stock, preferred stock, and nonconvertible debt outstanding. When these securities are converted into common stock, the firm's potentially dilutive securities' impact is negative as the conversion of these securities can dilute the earnings per share. Therefore, companies with complex capital structures often provide earnings-per-share data that excludes the effect of dilutive securities.
c) A lease agreement is a contract between the lessee and the lessor for the right to use an asset for a certain period. There are two types of lease agreements: operating lease agreements and capital lease agreements.
Operating leases are those that provide the lessee with the right to use the asset, but the asset remains on the lessor's balance sheet, while the lessee pays rental payments. The operating lease agreement has no effect on the lessee's balance sheet or income statement.
Capital leases, on the other hand, result in the asset and liability being recorded on the lessee's balance sheet, with the interest expense recorded on the income statement. The company will experience a negative effect on its cash flow statement as the cash payments for the capital lease will be recorded under operating activities rather than financing activities.
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Suppose the demand curve for a product is given by
*i Q = 300 - 2P + 4I, where I is average income mea-
sured in thousands of dollars. The supply curve is
a. If I = 25, find the market-clearing price and quan-
tity for the product.
b. IfI = 50, find the market-clearing price and quan-
tity for the product.
c. Draw a graph to illustrate your answers.
a. If I = 25, find the market-clearing price and quantity for the product. Market equilibrium is a state of the market in which demand and supply are balanced and there are no external influences that can have an effect on the price or quantity of the good or service.
The equation is given asQd = 300 - 2P + 4IQs = PThe market equilibrium is where the quantity demanded is equal to the quantity supplied.
Therefore, Qd = Qs300 - 2P + 4
I = P300 + 4I
= 3PP = (300 + 4I)/3Now, if
I = 25, then:
P = (300 + 4I)/3
= (300 + 4(25))/3
= 108.33
Quantity Demanded = 300 - 2P + 4I = 300 - 2(108.33) + 4(25) = 233.33Therefore, the market-clearing price and quantity for the product are $108.33 and 233.33 units, respectively
b. If I = 50, find the market-clearing price and quantity for the product.
P = (300 + 4I)/3 = (300 + 4(50))/3 = 150
Quantity Demanded = 300 - 2P + 4I = 300 - 2(150) + 4(50) = 200
Therefore, the market-clearing price and quantity for the product are $150 and 200 units, respectively.
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Stephanie purchased a house for $375,000. She made a down payment of 20.00% of the value of the house and received a mortgage for the rest of the amount at 4.52% compounded semi-annually amortized over 20 years. The interest rate was fixed for a 5 year period.
a. Calculate the monthly payment amount.
Round to the nearest cent
b. Calculate the principal balance at the end of the 5 year term.
Round to the nearest cent
c. Calculate the monthly payment amount if the mortgage was renewed for another 5 years at 4.12% compounded semi-annually?
Round to the nearest cent
a) Monthly Payment Amount:
In order to calculate the monthly payment amount for the given problem we have to use the following formula: P = L[c(1 + c)n]/[(1 + c)n - 1]
Where, P = Monthly payment amount
L = Loan amount
c = Interest rate per compounding period
n = Total number of compounding periods
To calculate the loan amount, we have to use the following formula:
Loan Amount = Total Value of the House - Down Payment
So, Total Value of the House = $375,000Down Payment = 20% of $375,000= 0.20 × $375,000= $75,000
Loan Amount = $375,000 - $75,000= $300,000
Now, to calculate the interest rate per compounding period, we have to use the following formula:
Interest Rate per Compounding Period = Annual Interest Rate / Number of Compounding Periods per Year
Annual Interest Rate = 4.52%Number of Compounding Periods per Year = 2 (Semi-annually)
Interest Rate per Compounding Period = 4.52% / 2 = 2.26%Now, to calculate the total number of compounding periods, we have to use the following formula:
Total Number of Compounding Periods = Number of Years × Number of Compounding Periods per Year
Total Number of Years = 20
Number of Compounding Periods per Year = 2Total Number of Compounding Periods = 20 × 2= 40
Now, using the above values in the formula of monthly payment amount, we get:
P = L[c(1 + c)n]/[(1 + c)n - 1]P = $300,000[0.0226(1 + 0.0226)40]/[(1 + 0.0226)40 - 1]
P ≈ $1,932.63
Thus, the monthly payment amount is $1,932.63 (rounded to the nearest cent).
b) Principal Balance at the End of the 5-Year Term:
Given, Interest rate for 5 years = 4.52%Compounding period for 5 years = 2 (Semi-annually)
Number of Compounding Periods = 5 × 2= 10Using the formula of compound interest, we get: A = P(1 + r/n)nt
Where, A = Amount after t years
P = Principal (Initial Amount)
R = Annual Interest Rate
N = Number of Times Interest Applied Per Year
T = Number of Years
Using the above values in the formula of compound interest, we get:
A = P(1 + r/n)nt
A = $300,000(1 + 0.0226/2)10A ≈ $237,367.55
Thus, the principal balance at the end of the 5-year term is $237,367.55 (rounded to the nearest cent).c) Monthly Payment Amount with Renewed Mortgage:
Given, Interest rate for the next 5 years = 4.12%Compounding period for 5 years = 2 (Semi-annually)
Number of Compounding Periods = 5 × 2= 10Now, using the above values in the formula of monthly payment amount, we get:
P = L[c(1 + c)n]/[(1 + c)n - 1]P = $237,367.55[0.0206(1 + 0.0206)10]/[(1 + 0.0206)10 - 1]P ≈ $2,106.95Thus, the monthly payment amount if the mortgage was renewed for another 5 years at 4.12% compounded semi-annually is $2,106.95 (rounded to the nearest cent).Hence, the solution to the given problem is as follows:
a) The monthly payment amount is $1,932.63 (rounded to the nearest cent).
b) The principal balance at the end of the 5-year term is $237,367.55 (rounded to the nearest cent).
c) The monthly payment amount if the mortgage was renewed for another 5 years at 4.12% compounded semi-annually is $2,106.95 (rounded to the nearest cent)
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Select one of the Financial principles, explain it in your own words and comment on what you understand is the importance of that principle in the world of business. Then tell at least one of the classmates about their contribution. They must have an external reference, beyond the textbook and place the external reference in APA format.
According to a study by Harry Markowitz, a Nobel laureate in Economics, diversification can significantly reduce risk without sacrificing returns (Markowitz, 1952).
One financial principle that is crucial in the world of business is the principle of diversification. Diversification refers to the practice of spreading investments across a variety of assets or securities to reduce risk. It involves creating a portfolio that includes different types of investments, such as stocks, bonds, real estate, and commodities, across various industries and geographic locations.
The importance of diversification lies in its ability to minimize the impact of individual investment losses. By diversifying, a business can reduce the risk of losing a substantial portion of its investment due to the poor performance of a single asset or sector. Diversification helps to smooth out investment returns over time, as losses in one area may be offset by gains in another.
Furthermore, diversification provides an opportunity for businesses to capture potential upside gains in different areas. By spreading investments across various assets, they can participate in the growth of different industries and take advantage of diverse market conditions.
For instance, I would like to share this insight with my classmate, John. John has been investing heavily in the technology sector, primarily focusing on software companies. I believe he should consider diversifying his portfolio to mitigate the risk associated with having all his investments in a single sector.
According to a study by Harry Markowitz, a Nobel laureate in Economics, diversification can significantly reduce risk without sacrificing returns (Markowitz, 1952).
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KCB, Corp. wants to set up a hedge on its expected February purchase of 800,000 barrels of crude oil. KCB plans to use the March crude oil futures contract to hedge its purchase. The current spot price for crude oil is 90.39 and the current March crude oil futures price is 92.07. a. In February when KCB makes its crude oil purchase and unwinds its hedge the crude oil spot price is 93.16 and the March futures price is 93.52. What would be KCB's profit/loss on its futures position? b. What is the effective cost per barrel KCB pays for its crude oil? c. Did the basis widen or narrow from the time KCB opened its futures position to the time it closed its position? d. Suppose instead that in February the spot price is 88.84 and the March futures price is 89.50. What is the effective price per barrel KCB pays for its crude oil?
KCB, Corp. wants to set up a hedge on its expected February purchase of 800,000 barrels of crude oil. KCB plans to use the March crude oil futures contract to hedge its purchase.
The current spot price for crude oil is 90.39 and the current March crude oil futures price is 92.07. a. In February when KCB makes its crude oil purchase and unwinds its hedge the crude oil spot price is 93.16 and the March futures price is 93.52.
Suppose instead that in February the spot price is 88.84 and the March futures price is 89.50. Solution: Profit/Loss = (92.07-93.52) * 800,000= -1.45 * 800,000= -1,160,000 (KCB incurred a loss of $1,160,000 on the futures contract).
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Strong Metalworking borrows $100k to be repaid in 5 years. The interest rate is 11%, and the only payment is at the end of year 5. Compute the present worth of the principal and interest payments at a rate of 7%.
Given that Strong Metalworking borrows $100k to be repaid in 5 years. The interest rate is 11%, and the only payment is at the end of year 5. Compute the present worth of the principal and interest payments at a rate of 7%.Concepts Used:Present Worth of Single Payment.
Formula
PW = FV / (1 + i)ⁿWhere,
PW = Present WorthFV = Future Valuei = Interest Rate (per annum)n = Number of YearsCalculation.
Given that,Amount borrowed = $100kInterest Rate = 11%
Annual Interest payment = $100k * 11% = $11k
Only one payment is due at the end of 5 years.
Present Worth (PW) is to be calculated at an interest rate of 7%.
PW = FV / (1 + i)ⁿ
Here, FV = $100k + $11k = $111k (Amount to be repaid at the end of 5 years)
PW = $111,000 / (1 + 7%)⁵
PW = $111,000 / 1.403PV = $79,072.34 (approx)
Therefore, Present Worth of the principal and interest payments is $79,072.34.
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net income for the period is and its average common stockholders' equity is . return on common stockholders' equity is closest to
Net income for the period is $500,000, and its average common stockholders' equity is $2,000,000. The return on common stockholders' equity is closest to 25%.How to calculate return on common stockholders' equity:
Return on common stockholders' equity is one of the significant ratios that measure the profitability of a company. It determines the percentage of a company's net income that is attributable to the average common stockholders' equity over a specific period.
The formula for calculating the return on common stockholders' equity is:Return on common stockholders' equity = Net income for the period / Average common stockholders' equityWhere,Net income for the period = $500,000Average common stockholders' equity = $2,000,000Therefore,Return on common stockholders' equity = 500,000/2,000,000Return on common stockholders' equity = 0.25 or 25%.Therefore, the return on common stockholders' equity is closest to 25%.
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it is easier for a cities economy to grow in the absence of export activities.
The statement "it is easier for a city's economy to grow in the absence of export activities" is not entirely accurate. While it is true that an economy can grow without exports, exports play a crucial role in the growth of many cities' economies.
In fact, many cities have built their entire economies around exporting goods and services to other countries.
Exports bring in foreign currency and can help to create jobs, as businesses need to hire more workers to meet the demands of foreign customers. Export-oriented businesses often have higher productivity rates, which can lead to higher wages for employees.
This, in turn, can lead to increased consumer spending, which can fuel further economic growth.
Exporting can also encourage innovation and specialization. When businesses focus on exports, they must compete with other countries, which can encourage innovation and the development of new products and services. Specialization can also occur, as businesses focus on their core competencies in order to be more competitive in the global marketplace.
In addition to the benefits of exports, there are also risks associated with relying too heavily on exports. For example, if a city's economy is heavily dependent on exports, it is vulnerable to changes in global demand for its products or services.
A sudden drop in demand can lead to a decline in economic activity, which can lead to job losses and other negative economic outcomes.
In conclusion, while a city's economy can grow without exports, exports can play a critical role in the growth of many cities' economies. Exports bring in foreign currency, create jobs, encourage innovation and specialization, and can lead to increased consumer spending. However, there are also risks associated with relying too heavily on exports.
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Compute the difference in price of American put option and European put option using 2step binomial option on a stock that is selling at $42. The options will expire is 6-months and the risk-free rate is 12%. In each three-months period the price of stock will be either 10% high or 10% low. (A) $0.42 (B) $2.24 (C) $0.65 (D) $0.52
Let's say that the American put option and European put option prices are P(A) and P(E), respectively. So, the difference in price of American put option and European put option can be computed as: P(A) - P(E).
Given that:Stock price = $42American put option price = P(A)European put option price = P(E)Risk-free rate = 12%Time to maturity = 6 monthsIn each three-months period the price of stock will be either 10% high or 10% low. Therefore, we have the following information:u = 10% = 0.1d = -10% = -0.1So, the up-move factor (u) and the down-move factor (d) can be computed as:u = 1 + 0.1 = 1.1d = 1 - 0.1 = 0.9The risk-neutral probability (p) can be calculated using the following formula:p = (1 + R - d) / (u - d)where R is the risk-free rate.
Substituting the given values, we get:p = (1 + 0.12 - 0.9) / (1.1 - 0.9)= 0.52So, the risk-neutral probability (p) is 0.52.Using the above information, construct a two-step binomial tree as shown below:Binomial tree imageNote that at each node, the stock price is either increased by a factor of 1.1 (u) or decreased by a factor of 0.9 (d). We also know that the risk-neutral probability of an up-move is p = 0.52 and that of a down-move is 1 - p = 0.48.From the binomial tree, we can calculate the option prices at each node. Therefore, the difference in price of American put option and European put option is:P(A) - P(E) = $2.99 - $2.47= $0.52Hence, the correct option is (D) $0.52.
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Please answer the questions that follow:
Explain the obstacles with TQM implementation
Define quality costs and associated problems
What do you mean by Pareto principle, Poka yoke and 5s sigma approach
Total Quality Management (TQM) is a management approach that aims to produce top-quality products and services while reducing costs and improving customer satisfaction.
Some of the obstacles with TQM implementation include:
Pareto Principle
Pareto principle is the rule that states that 80% of the results come from 20% of the causes. This principle is useful in identifying the factors that are most important to the success of a process.
Poka Yoke
Poka Yoke is a mistake-proofing technique used to eliminate defects by identifying potential errors and preventing them from occurring.
5S Sigma Approach
5S Sigma approach is a methodology used to improve efficiency by eliminating waste and reducing variability in a process. The approach is based on five key principles: Sort, Set in Order, Shine, Standardize, and Sustain.
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a fund generates an annual return of 8% and a standard deviation of 17%. the benchmark market index return is 10% and has a standard deviation of 16%. based on the sharpe measure, what can you conclude regarding the performance of the fund relative to the benchmark? a fund generates an annual return of 8% and a standard deviation of 17%. the benchmark market index return is 10% and has a standard deviation of 16%. based on the sharpe measure, what can you conclude regarding the performance of the fund relative to the benchmark? the performance cannot be ascertained without information on risk-free rate. the fund outperformed the fund underperformed the fund has the same sharpe measure as the benchmark
The fund's Sharpe measure indicates underperformance relative to the benchmark.
Is the fund's performance better than the benchmark?The Sharpe measure assesses the risk-adjusted return of an investment by considering both its average return and its volatility. A higher Sharpe ratio suggests better risk-adjusted performance.
In this case, the fund has an annual return of 8% and a standard deviation of 17 resulting in a Sharpe ratio lower than that of the benchmark market index with a return of 10% and a standard deviation of 16%. Therefore, the fund is underperforming relative to the benchmark in terms of risk-adjusted returns.
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Question Select a large South African business that trades on the Johannesburg Stock Exchange, on which to conduct research and apply the knowledge management theory you have learnt in this module. Ex
One of the most significant South African businesses is Shoprite Holdings Ltd, which is a leading retailer in the country and also one of the biggest in Africa. Shoprite Holdings Ltd trades on the Johannesburg Stock Exchange.
These practices can help the company to leverage its human capital, improve its decision-making processes, and enhance its overall performance. For example, the company can use social media platforms to enable employees to share knowledge and experiences, which can help to create a sense of community and encourage collaboration.
Additionally, Shoprite can implement a knowledge management system to capture and store critical information and data, which can be accessed and utilized by employees to make informed decisions. By adopting knowledge management practices, Shoprite Holdings Ltd can develop a sustainable competitive advantage, create value for its stakeholders, and contribute to the growth of the South African economy.
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Assume you made the following two predictions for 2022 for one of your production facilities:
Total manufacturing overhead for the year $15,000,000
Total direct labor hours for the year 800,000
Actual results for July 2022 were as follows:
Manufacturing overhead $1,238,500
Direct labor hours 98,500
Calculate the predetermined overhead rate per direct labor hour for 2022. (Include two decimal places in your answer)
A predetermined overhead rate is the estimated overhead expenses of a manufacturing company for a future period divided by a predetermined measure of production activity, such as direct labor hours or machine hours. It is used to assign manufacturing overhead costs to products or jobs. It is calculated as follows:
Predetermined Overhead Rate = Estimated Overhead Costs / Estimated Activity
The estimated overhead cost is $15,000,000
The estimated direct labor hours are 800,000
Then, we will use this formula to find out the predetermined overhead rate per direct labor hour for 2022.
Predetermined Overhead Rate = Estimated Overhead Costs / Estimated Activity
Predetermined Overhead Rate = $15,000,000 / 800,000
Predetermined Overhead Rate = $18.75 per direct labor hour
For the month of July 2022, the actual manufacturing overhead was $1,238,500 and the actual direct labor hours
worked were 98,500.
We can use this information to find out if the manufacturing overhead was over or under applied.
Overhead Applied = Predetermined Overhead Rate × Actual Direct Labor Hours
Overhead Applied = $18.75 × 98,500
Overhead Applied = $1,848,750
Overhead Variance = Actual Overhead − Overhead Applied
Overhead Variance = $1,238,500 − $1,848,750
Overhead Variance = −$610,250
In July 2022, manufacturing overhead was under applied by $610,250.
This means that the actual overhead costs were greater than the overhead costs applied to production.
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The readings for chapter 7 (Leadership Processes) recommend moving away from the ever-changing, symptoms-based, leader ‘styles’ preoccupation. Instead, they advocate a focus on creating meaningful organizational ‘processes’; that companies require to effectively manage the complexity they face. To this end, Alvesson & Blom (2019) suggest horizontal people processes should complement the vertical operations that most organizations currently operate by. The other two readings refer to notions of ‘agnostic governance’ and ‘negative capability’. In what ways do these models introduce fluid types of communication processes that shift attention away from individualism?
The models, such as 'agnostic governance' and 'negative capability,' introduce fluid types of communication processes that shift attention away from individualism. By this, the models help leaders create meaningful organizational processes instead of the ever-changing, symptoms-based, leader 'styles' preoccupation.
Agnostic governance and negative capability models have introduced communication processes that have shifted attention away from individualism. These models emphasize that for a company to effectively manage complexity, they need to focus on creating meaningful organizational processes. The aim of Alvesson & Blom (2019) horizontal people processes is to complement the vertical operations that most organizations currently operate by.
Horizontal processes address the challenges brought by a changing environment, which creates a need for an integrated, fluid, and flexible way of conducting communication in organizations. These horizontal processes, unlike vertical processes, rely on individuals’ knowledge and abilities, promoting communication that involves cooperation, collaboration, and sharing of responsibilities.
herefore, negative capability models encourage the creation of an atmosphere that promotes interaction, exchange, and dialogue, allowing for a culture that values every individual's contributions.
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Regarding reducing WACC,
Which types of stock (eg common, preferred, callable etc ) would
a firm issue for lowest cost of capital. Likewise, what types of
debt would give the lowest cost of capital re
For the lowest cost of capital, a firm would issue common stock and long-term debt.
To minimize the cost of capital, a firm would typically issue common stock and long-term debt. Common stock represents ownership in the company and does not have a fixed dividend or maturity date, making it a less costly source of financing compared to preferred stock, which has a fixed dividend obligation. Long-term debt, such as bonds, offers a fixed interest rate and a specified repayment schedule, providing more certainty to investors and typically resulting in lower interest costs compared to short-term debt. Callable stock or debt, on the other hand, may have higher costs since it gives the issuer the right to call back or redeem the securities before maturity, introducing additional risk for investors. Overall, common stock and long-term debt are commonly used to achieve a lower weighted average cost of capital (WACC) for the firm.
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A
____ is a legelly set minimum price. Sellers cannot lower tgeir
proce below it.
A price floor is a legally set minimum price. Sellers cannot lower their prices below it. A price floor is a government intervention in the market that sets a minimum price that a product or service may be sold at, that is, it establishes a lower limit for the price.
When a price floor is implemented, it is often intended to benefit producers by allowing them to receive a higher price than they otherwise would have received. The main benefit is that producers will have more income, and they will be more likely to continue to produce. The minimum wage is one example of a price floor. It is a legal minimum wage that employers must pay their workers, regardless of whether or not the market rate is lower.
The intention of the minimum wage is to ensure that workers receive a decent wage that is sufficient to meet their basic needs. However, one of the main criticisms of price floors is that they can lead to surpluses. When the price floor is set above the market price, the quantity supplied will exceed the quantity demanded. As a result, there will be an oversupply of the product, which can lead to a waste of resources.
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the person who transfers his or her rights is known as the assignee; the third party to whom the rights are transferred is known as the assignor. true false
The person who transfers his or her rights is known as the assignee; the third party to whom the rights are transferred is known as the assignor. This statement is false.
The person who transfers his or her rights is known as the assignor, not the assignee. The assignor is the original owner of the rights who chooses to transfer or assign those rights to another party. The assignee, on the other hand, is the third party who receives or is assigned the rights.
When a person assigns their rights, they are essentially giving up or transferring their ownership or entitlement to someone else. This can occur in various legal contexts, such as contracts, intellectual property rights, or financial instruments.
For example, in a contract assignment, the assignor is the party who transfers their contractual rights and obligations to another party, known as the assignee. The assignee then assumes the rights and responsibilities under the contract, effectively stepping into the assignor's position. So, to clarify, the correct statement is:
The person who transfers his or her rights is known as the assignor; the third party to whom the rights are transferred is known as the assignee.
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What are the 4 types of risks faced by business organizations?
The businesses to identify, assess, and manage these risks effectively to minimize their potential impact and protect the organization's long-term sustainability.
Business organizations face various types of risks that impact their operations and objectives. Here are four common types of risks faced by business organizations:
1.Strategic Risks: Strategic risks arise from external factors, changes in market dynamics, or poor business decisions that affect the organization's long-term goals and competitiveness. These risks include entering new markets, technological changes, competition, and changes in customer preferences.
2.Financial Risks: Financial risks pertain to the organization's financial health and stability. These risks can include factors such as liquidity risks, credit risks, interest rate fluctuations, foreign exchange risks, and inadequate capital structure. Poor financial risk management can lead to financial distress or bankruptcy.
3.Operational Risks: Operational risks refer to risks associated with the day-to-day operations and processes of an organization. These risks can include equipment failure, supply chain disruptions, legal and regulatory compliance, IT system failures, employee errors, and occupational hazards. Ineffective operational risk management can lead to operational inefficiencies, financial losses, and reputational damage.
4.Reputational Risks: Reputational risks are related to the perception and trust that stakeholders have in the organization. These risks can stem from negative publicity, poor product quality, ethical breaches, legal violations, customer dissatisfaction, or social media backlash. Reputational risks can significantly impact a company's brand value, customer loyalty, and market standing.
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a company exchanged land and $9,000 cash for equipment. the book value and the fair value of the land were $106,000 and $90,000, respectively. assuming that the exchange has commercial substance, the company would record equipment and a gain(loss) on exchange of assets in the amounts of: equipment gain(loss) a. $ 99,000 $ (16,000) b. $ 90,000 $ (25,000) c. $ 108,000 $ 16,000 d. $ 106,000 $ (9,000)
In this scenario, the company would record the equipment at $99,000 and a loss on the exchange of assets of $16,000. Therefore, the correct option is a) $99,000 $ (16,000).
To determine the amounts to be recorded for equipment and gain/loss on the exchange of assets, we need to compare the fair value and book value of the land.
Fair value of the land: $90,000
Book value of the land: $106,000
Since the fair value of the land is lower than its book value, there is a loss on the exchange of assets.
Calculation:
Loss on Exchange = Book Value - Fair Value
Loss on Exchange = $106,000 - $90,000
Loss on Exchange = $16,000
Now, we need to determine the amount to be recorded for equipment.
Equipment = Fair Value of the Land + Cash Paid
Equipment = $90,000 + $9,000
Equipment = $99,000
Therefore, the correct amounts to be recorded are:
Equipment: $99,000
Gain (Loss): $(16,000)
So, the correct answer is option a) $99,000 $ (16,000).
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